Chafee's office gave memo to 38 Studios defendant

Gov. Lincoln Chafee's office inadvertently turned over a privileged document to a defendant in the 38 Studios lawsuit, attorneys for Rhode Island's economic development agency said Friday in asking a judge to order copies of the document destroyed.

Chafee legal counsel Anita Flax said during a hearing in the case that she mistakenly turned over the memorandum to Wells Fargo, one of 14 defendants in the suit over the collapse of former Red Sox pitcher Curt Schilling's video game company.

Attorneys for the former Economic Development Corp. say the May 22, 2012, memorandum to three members of Chafee's staff presented legal advice to him about 38 Studios as the company was imploding.

The EDC, now called the Commerce Corp., in 2012 sued Schilling and others after 38 Studios filed for bankruptcy, charging that the agency's board was misled into approving a $75 million loan guarantee for the startup. The defendants deny the charges.

The state is on the hook for some $90 million related to the deal.

Flax told Superior Court Judge Michael Silverstein on Friday that she turned the document over "inadvertently, unintentionally, unknowingly, accidentally" in the course of responding to a subpoena. Wells Fargo's attorneys were asked to delete or destroy copies of the document, she said, but they declined. Wells Fargo wants the judge to allow the defendants to keep the memo and order the EDC to turn over additional documents related to its preparation.

EDC attorney Max Wistow said the document is protected under the attorney-client privilege. Its authors, Jonathan Savage and Thomas Carlotto, were serving at the time as special counsel to Chafee in 38 Studios-related matters. Their firm is now the EDC's general counsel.

Wells Fargo attorney Thomas Holt argued Friday his client is entitled to the document and that the attorney-client privilege is being misapplied. In a court filing last month, he wrote that the memo "makes certain directly relevant admissions regarding the knowledge of the EDC board" about the 38 Studios transaction.

"The EDC's unprincipled invocation of the attorney-client privilege in regard to the memorandum must be seen for what it is -- yet another attempt to bar disclosure of damaging evidence," the filing says.

Silverstein reviewed the document in chambers with lawyers for both sides. He did not immediately rule on the matter.